Year: 2021

Lamb forecasts in sheep shape

Posted on by Caitlin Dearden

The data prepared by the team at TEM points to confidence in the lamb market into 2022 and beyond. Where does StockCo see the opportunity? COO Tim Pryor says “It’s the one percenters that count. Our most successful clients who consistently deliver great trading margins are really focused on doing the little things right – drench frequently and move to a fresh paddock, treat for fly or lice before you see the signs, know how much you have and the quality of your feed – get nutritional advice, vaccinate proactively for things like pulpy kidney. The market is out of our control, but best practise management is without doubt the common thread we observe when paying out strong trading margins to our clients”.

Author – Matt Dalgleish, Thomas Elder Markets

The Snapshot

  • The TEM ESTLI fair value model is currently predicting an annual average of 846c/kg for 2022 and 877c/kg for the 2023 season.
  • It is not uncommon to see variance in price between 15-20% above and below the annual average price during the year for the ESTLI, suggesting that we could see a winter peak above 1000c/kg cwt and a seasonal low towards 700c/kg cwt in 2022.
  • A trade matrix demonstrates that under these forecast conditions there is money to be made buying restocker lambs at current prices.

The Detail

Updated forecast modelling of the Eastern States Trade Lamb Indicator (ESTLI) points to successive seasons ahead of relatively strong lamb pricing. The Thomas Elder Markets (TEM) fair value model for the ESTLI takes into account demand and supply factors that have historically been a key influence on the value of trade lambs in the eastern states and provides an annual average fair value price forecast to 2023, based on these supply and demand metrics.

ESTLI Fair Value Model Annual

The model suggested an annual average value for the ESTLI of 820c/kg cwt for the 2021 season. The actual annual average for the ESTLI this season has been 863c/kg, as at early December so we have slightly undercooked it. However, moving into the next few seasons the forecasted annual price of the ESTLI is showing strength.

Meat and Livestock Australia are expecting increased lamb slaughter volumes as the flock rebuilds over the next few years, usually this acts as a dampener on prices, but strong sheepmeat export prospects, a recovering global economy post Covid-19 and an Australian dollar that is trending lower is working to support the price of trade lambs into the 2022 and 2023 seasons. Indeed, the TEM ESTLI fair value model is currently predicting an annual average of 846c/kg for 2022 and 877c/kg for the 2023 season.

Historic ESTLI percentage price gain/loss patterns within the season demonstrate that price peaks are common during winter and the spring flush of new season lambs often corresponds with a seasonal low ebb to market pricing.

On average, it is not uncommon to see variance in price between 15-20% above and below the annual average price during the year for the ESTLI. This would suggest that on a forecast annual average of 846c/kg next year in the ESTLI we could see a winter peak above 1000c/kg cwt and a seasonal low towards 700c/kg cwt. Higher annual pricing in the ESTLI for 2023 could even see the seasonal peak heading towards 1050c/kg cwt.

Back of the envelope analysis of a simple lamb trading scenario highlights some good opportunities for the lamb producer into the next few years. Assuming the following trade situation:

  • Buy 30 kg liveweight restocker lamb
  • Carry to 50kg liveweight heavy lamb and sell
  • Skin value of $5 and dressing percentage of 45%
  • Allowance of $25 per head costs for items such as transport, shearing, animal welfare and finance if applicable (Note – different enterprises will have different cost structures, your own per head costs can be added/deducted from the final margin if they are lower or higher than the $25 allowance)

Last week 30kg restocker lambs at saleyards in Victoria and NSW were fetching prices close to the 1000 c/kg cwt mark. Based on a 1000c/kg buy price and an estimated sale price nearer the ESTLI fair value model average of approximately 850c/kg cwt would net a per head profit, based on the trading assumptions, of $36.

As the matrix highlights, picking up cheaper restocker lambs and/or selling for a higher value could net as high as $50-$70 per head. On the other hand, selling toward the lower end of the forecast range for 2022 still manages to eke out a profit, albeit marginal at around $5-15 per head.

The Sporting Chance initiative

Posted on by Caitlin Dearden
StockCo’s Sporting Chance initiative will give GST registered sports clubs an opportunity to create an additional revenue stream.

The Snapshot 

  • Up to 83% of sports clubs have suffered significant financial losses during COVID-19
  • The Sporting Chance initiative is set to launch on 22nd of November
  • Sporting Chance is expected to provide financial support for up to 20 sports clubs

The Detail 

Graziers and sports clubs know the value of a patch of grass like no one else – especially during difficult times.

Surveys have found that up to 83% of sports clubs have suffered significant financial losses during the COVID-19 pandemic with 13% facing imminent closure.

StockCo’s livestock specialists have been providing graziers with financial facilities since 1995, allowing businesses to manage cash flow peaks and troughs, and we are excited to launch the Sporting Chance initiative.

This product will provide an opportunity for GST registered Australian regional sporting clubs to generate capital through livestock, giving them access to a 100% finance facility for purchases up to $50,000.

Club supporting farmers can sell livestock to the club at marking time and continue to graze as part of their normal operation. At sale they designate the livestock which are sold on behalf of the Sporting Chance club. Secondly purchased lines can be divided amongst participating farmers and ran as a normal livestock trade on behalf of the club.

The Sporting Chance initiative will be a game changer for clubs who want to introduce a new revenue stream without drawing on existing funds or increasing fundraising pressures.

Our National Business Development Manager Chris Howie says the initiative will aim to provide up to 20 sports clubs with much needed financial support each year.

“Sporting Chance will provide clubs with fantastic opportunities to bring in extra funding without all of the extra effort that usually goes into raising money,” he said.

“We know how important sports clubs are for community wellbeing, and we’re looking forward to developing long-term partnerships in this space and growing that positive impact.”

If you need additional funding for your sports club, StockCo is here to help. For additional information on the innovative Sporting Chance initiative, call Chris Howie on 0408 842 331.

To feed or not to feed

Posted on by Caitlin Dearden
That is the question – A look at gross margins on a lamb feedlot trade.

As a specialist livestock funder, we are fortunate to work closely with our clients to understand the fundamentals of what drives weight gain performance. Taking it a step further, the data on performance we capture helps us and our clients make timely and strategic decisions.

We have seen a significant shift toward lamb feedlotting. The investment of time, education and technology in this space has evolved from a drought management mechanism, to first class outfits delivering on-spec product with confidence.

The attached article from TEM talks to the performance of lamb feedlotting over time, with a retrospective outlook. As a precursor to the article, we’ve provided the following observations from our Regional Livestock Managers who are on the ground, working closely with their customers.

  • Be across your ration and what’s in it. Margins can be skinny therefore mortalities due to a ration which is too hot can quickly eat into profits. Get the right nutritional advice.
  • Consider the use of pellets.  More and more pellet manufacturers are entering the market. They often include necessary buffers and reduce risk of mortalities through acidosis.
  • Weigh consistently and pen lambs accordingly.  Shy feeders can go downhill quickly if they are not getting an opportunity to feed and being bullied out by heavier lambs.
  • StockCo trends being observed – Store lambs are being purchased at heavier weights (approx. 40kg), with the view of getting them onto a ration faster and turning the trade around within 60-80 days.  Some mixed farming operations are achieving 2 or 3 trades over the Spring and Summer months using this method, running lambs on post-hay paddocks and post-harvest stubbles before finishing on farm in containment pens.

 

Author- Matt Dalgleish, Thomas Elder Markets

The Snapshot

  • Since 2005 the long-term average gross margin has been a $38 profit per head of lambs in the feedlot.
  • Bearing in mind that since 2005 the lamb price has tripled it is probably a more accurate to measure the lamb feedlot margin in percentage terms relative to the prevailing lamb price.
  • As the percentage margin trend identifies this has not changed much over the last fifteen years, sitting at about 24% of the lamb sale price.
  • Margins below a 4% gain or above a 43% profit would be considered extreme, based on the historic variation in the percentage margin.

The Detail

There is growing interest in the idea of feedlot feeding for lamb fattening, not just to accommodate times when pasture is tight during drought, but as an ongoing dedicated feed regime as we see in cattle feedlot systems.

Victoria and NSW are the nation’s largest lamb rearing states, so two gross margin models were created for each state to assess the monthly margin achievable, based on average monthly feed and lamb pricing opportunities in each region. Given that lamb and feed grain markets in each region often follow closely there are subtle differences between gross margins in NSW and Victoria, but the general trend shows both margins are usually within $5-$10 of each other.

Feedlot Gross Margins - Monthly Average

The following trade scenario was established for each state:

  • Buy 40 kg liveweight feeder lamb based on average monthly price levels in each state
  • Feed for two months assuming a ration of 75% barley, 15% oats and 10% roughage with respective pricing relevant to each region. It is understood that oats are being replaced with lupins/beans, unfortunately there is limited historic price series data for this feed input, so the ration has retained oats.
  • 75 kg of feed purchased per lamb at the time the feeder lambs are purchased, locking in the feed cost.
  • 25 kg consumed by lambs on average per day with a daily weight gain estimate of 330 grams (feed conversion ratio of 3.75 to 1). A two-week ration induction phase is included in the feed regime, however total feed consumed/weight gain is averaged over the time the lamb spends in the feedlot.
  • Lambs to be sold at 60kg liveweight, after a 20 kg weight gain, at the prevailing average monthly heavy lamb price in each state

Combining the gross margin of both NSW and Victoria we can analyse the average feedlot margin achievable within the south eastern mainland of Australia. Since 2005 the long-term average gross margin has been a $38 profit per head of lamb in the feedlot, with a normal fluctuation between $17 to $59 as demonstrated by the 70% range boundary. The historic trend in the gross margin shows that movements under a loss of $4 per head or above a profit of $80 per head would be considered extreme.

Lamb Feedlot Gross Margin - Monthly Average

Bearing in mind that since 2005 the lamb price has tripled it is probably a more accurate to express the lamb feedlot margin in percentage terms relative to the prevailing lamb price. This way we can see if margins have increased over the last decade and a half or if the higher margins achieved since 2013 are proportional to the increase in the lamb price. As we can see by the margin trend the gross margin has increased by around $25 profit in 2005 to $55 by 2021.

Gross margins as a percentage of the lamb sale price highlights that long term average margins sit at 24% of the lamb sale price. As the percentage margin trend identifies this has not changed much over the last fifteen years. In percentage terms margins have usually fluctuated between 14% to 34%, as highlighted by the 70% range boundary. Margins below a 4% gain or above a 43% profit would be considered extreme, based on the historic variation in the percentage margin.

Lamb Feedlot Gross Margin - Percentage of lamb sale price

Gross Margin Seasonality

A seasonal perspective of the NSW lamb feedlot trade shows that the margin tends to fluctuate between a $10 to $70 gross margin profit throughout the season with the margin tending to narrow towards the last quarter of the season.

The NSW average seasonal margin shows an increased level of stability during the first half of the year and higher potential volatility toward the end of winter. Often the northern hemisphere grain markets see turbulence during the middle of the year as the northern hemisphere harvest draws closer. The higher global price volatility in grain prices can have an impact on Australia feed grain prices at this time leading to uncharacteristically higher or lower gross margins on the NSW lamb feedlot trade.

NSW lamb feedlot gross margins

The 2020 and 2021 trend has demonstrated the potential for volatility in NSW margins in August with 2020 registering a loss in excess of $25 per head. As a direct result of COVID19, the heavy lamb price took a hit at this time due to lower export demand and a capacity issue in Victorian abattoirs sweeping through to the northern markets.  Meanwhile August 2021 has recorded a $90 gross margin profit. October 2021 saw the NSW lamb feedlot margin achieve $62 profit per head, nearly 70% higher than the average October margin of $37 per head, according to the ten-year average trend for October.

Victorian lamb feedlot gross margin

The seasonal pattern for the Victorian lamb feedlot trade shows a higher degree of variation throughout the year, compared to the NSW pattern with fluctuations between $15 to $80 profit per head. As was the case in NSW, the Victorian experience is also for higher margin volatility during late winter with a similar wide disparity in margins seen during August 2020 and 2021. August 2021 saw Victorian gross margins extending over $110 per head profit, meanwhile the 2020 August period saw losses nearing $18 per head, again drawing reference to the impacts of COVID19 mentioned above.

Margins in Victoria have eased since the August 2021 peak to see a gross margin of $85 profit recorded for October. Despite this recent decline the current Victorian margin sits at levels that are nearly double the October ten-year average of $43 per head gross margin profit.

Peaking Blinder

Posted on by Caitlin Dearden
Cattle markets are having a blinder of a season. Can money be made buying young cattle at these levels?

Author- Matt Dalgleish, Thomas Elder Markets

The Snapshot

  • Currently, for the 2021 season TEM modelling shows an average annual price of 375 cents/kg lwt is fair value for the National Heavy Steer. As of the end of September the actual annual average was 395 cents.
  • Projecting into 2022, using current estimates of all the variables that influence the heavy steer price, we can see that the model predicts an annual average of around 350 c/kg lwt, with a possible range of 305c/kg to 375c/kg.
  • Buying young cattle at the current EYCI level of 10.40 $/kg cwt, or 5.50 $/kg lwt and selling in 2022 at the fair value model annual average estimate of 3.50 $/kg would bring a profit of $200 per head.

The Detail

Both the Eastern Young Cattle Indicator (EYCI) and the National Heavy Steer price have hit all time peaks as September 2021 came to a close. The EYCI at 1042 cents/kg carcass weight (cwt) and the National Heavy Steer surging 35 cents in a day to trade at 475 cents/kg liveweight (lwt).

At these phenomenal prices it begs the question if there is any money in buying young cattle at these prices. How long are finished cattle prices likely to remain this high for in order to turn off stock at a profit once weight has been added to the animal?

Eastern young cattle indicator

A good start is to focus on the average annual prices achieved over a season rather than the extremes. Thomas Elder Markets have created a fair value modelling tool that assesses various demand and supply factors that influence the price of heavy steers. The model can help to demonstrate if the current annual average price is above or below what would be considered fair value, based on the factors that influence its price.

The model looks at factors like; global cattle prices, the value of the Australian dollar, annual Australian cattle slaughter volumes, beef export flows, beef processor profitability, supply ratios between Australia and key offshore beef export competitors, and wealth levels in our primary beef export markets to derive a fair value estimate.

Currently, for the 2021 season the model shows an average annual value of 375 cents/kg lwt is the fair value for the National Heavy Steer. As of the end of September the actual annual average for the year to date was 395 cents.

We are yet to see if the heavy steer price will remain up at 475 cents for the remainder of the season. But, if it does, it will place the annual average National Heavy Steer price at close to 420 cents/kg lwt.

National heavy steer fair value model

Projecting into 2022, using current estimates of all the variables that influence the heavy steer price, we can see that the model predicts an annual average of around 350 c/kg lwt, with a possible range of 305c/kg to 375c/kg. We can use this estimate to create a grass-fed cattle trade matrix that highlights the possibility of making money when buying young cattle at current price levels, near 1040 c/kg cwt.

Let’s assume the following trade scenario:

Buying a 300 kg yearling steer with the expectation of carrying through to sell at a weight of 600kg during 2022, with a carrying cost estimate of $250 per head on each steer to allow for factors such as agent fees, transport, supplements and the potential for some additional feed or other associated costs like finance (if applicable).

The matrix below shows the potential outcome of this grass-fed trade, in dollars per head profit or loss, at a variety of price entry and exit points. Buying young cattle at the current EYCI level of 10.40 $/kg cwt, or 5.50 $/kg lwt and selling in 2022 at the fair value model annual average estimate of 3.50 $/kg would bring a profit of $200 per head.

Cattle trade margin matrix

Assuming a better outcome on the sale, of say 4.00 $/kg lwt would generate a tidy $500 profit per steer. Indeed, heavy steer sale prices don’t start to hamper the profitability until you get towards a sale price closer to 3.00 $/kg lwt.

Producers with ample pasture and the confidence that they can turn off heavy steers in 2022 between $3.25 to $3.75 cents/kg lwt should feel comfortable buying young cattle at present levels.

Lambs to the slaughter

Posted on by Caitlin Dearden
What’s left for lamb and sheep slaughter volumes into spring and summer?

Author- Matt Dalgleish, Thomas Elder Markets

The Snapshot

  • Approximately 10 million lamb need to be turned off in the second half of 2021 in order to reach the MLA target of 20.3 million head of lamb processed by the end of the year.
  • Lamb slaughter volumes need to replicate the pattern set in the second half of 2020 in order to reach this target, which seem achievable.
  • However, sheep slaughter volumes need to increase 40%-45% above the levels set in the second half of 2020 to reach the MLA target of 6.1 million head of sheep processed, which appears to be a tough ask given the favourable season expected.

 

The Detail

As we enter spring, we can calculate what is left for lamb and sheep slaughter if we are to hit the Meat and Livestock Australia (MLA) annual slaughter targets for 2021. We know the season will help dictate how many lambs or sheep are slaughtered in the remainder of the year, but it’s still worth taking a look at the forecast annual projections from the MLA June sheep industry update and assessing what they mean for upcoming supply.

MLA are anticipating annual lamb slaughter of 20.3 million head by the end of the year. The Australian Bureau of Statistics (ABS) quarterly slaughter data demonstrates that as of the June quarter there have been 10.3 million head of lamb slaughtered so far this season. This leaves 10 million head for the remainder of the season if we are to reach the MLA forecast.

Normally we see a lull in lamb slaughter volumes in quarter three, as the average seasonal pattern demonstrates. If we assume a similar pattern to lamb slaughter flows as outlined by the average trend for the remainder of this season, we can expect around 4.7 million head of lamb processed in the September quarter and 5.3 million head in the December quarter to meet the MLA annual target of 20.3 million head. This would replicate the volumes seen in the second half of 2020.

A look at weekly east coast lamb slaughter volumes as reported by MLA demonstrate that we would need to see weekly slaughter volumes between 330,000 to 350,000 head per week to match the level of lamb slaughter we saw in 2020. As the current season trend outlines, we have been managing weekly levels of this magnitude since returning from the Easter break in April, so it certainly seems achievable.

The picture for sheep slaughter is somewhat different. MLA are expecting to see 6.1 million head of sheep processed for the 2021 season. However, as of the middle of the year there have only been 2.3 million head of sheep sent to meat works according to the ABS June data release.  This leaves approximately 3.8 million head of sheep required to be processed for the second half of the year to meet the MLA target.

As the average pattern for sheep slaughter demonstrates it is not uncommon to see a seasonal lull in processing volumes in the June quarter, with volumes often gaining momentum into quarter three and four. Assuming a similar pattern of sheep slaughter as the average trend we would need to see a 40%-45% lift in slaughter on the volumes seen during the second half of 2020 to meet the MLA target of 6 .1 million head of sheep processed by the end of 2021. This would equate to around 1.7 million head of sheep processed in quarter three and 2.1 million head for quarter four, if volumes were to mirror the average seasonal pattern.

The favourable season, low supply and strong intent to rebuild the flock has seen weekly sheep slaughter volumes persist at the lower end of the normal range for much of 2020 and 2021, as highlighted by the east coast weekly slaughter figures reported by MLA. In order to reach the MLA target of 6.1 million head of sheep slaughter by the end of 2021 we are going to need to see weekly slaughter volumes average around 100,000 head to the end of the year.

With the forecast for a wetter than normal spring and the prospect of a heap of green pasture available into summer it seems unlikely there will be much incentive for producers to turn off sheep at this magnitude to reach the MLA target of 6.1 million head.

Regional Round-Up

Posted on by Caitlin Dearden
Welcome to this month’s regional round-up – a glimpse of what’s going on in the paddocks right across Australia…
National overview – Chris Howie
Currently all the states, including South Australia and Western Australia, are quite wet, and there’s an expectation that more rain through August will start to create some water-logging issues with crop and pastures. Continued wet and cold conditions have seen livestock weight-gains slow down, with feed growth retarded by short days.Nearly all areas now have grazing grass, although it’s still quite short. New South Wales grazing crops are very good, and have provided backgrounders the opportunity to carry cattle well into August and September in order to maximise weight for age.Feeder steers and heifers continue to trade between $5.40-$6 per kg, depending on the breed. Most feedlots are very keen to secure numbers, which has seen some flexibility appear around minimum numbers and delivery points. Once numbers begin to appear, the supply specifications historically begin to tighten. Heavy cows 700kg+ have made up to $3.99 per kg liveweight, which is an exceptional return for older cows. Cows and calf units are eagerly sought to restock and provide a multiple option purchase. Bull sales continue to exceed all expectations following last year’s fantastic sale series, and the highlight to date is the Texas Angus bull Texas Iceman R725 making $225,000.Very good sucker lambs are starting to appear at Dubbo, Forbes and Wagga. Best lambs are very fresh – estimated at 24-25kg dressed – and are making $9.50-$10/kg with a $10-$12 skin. Mutton continues to trade across all areas at very good levels of $7 and better. Merino skins have been attracting good competition as well, returning $18-$23. July and early August are always periods of short supply, and considering locking some prices in for spring delivery at this time of the year is very sound business.Finally, many areas are now seeing considerable water in catchments, low areas, water courses and swamps. With any substantial rain there will be a high risk of flooding in many areas over the next six weeks.

 

Queensland – Angus Creedon
Currently we’re in the thick of winter, with much of northern New South Wales reporting wet and cold conditions. Queensland has responded well to the recent rainfall, with a lot of southern and central Queensland looking nice and green.The cold and wet weather in New South Wales means weight gains have eased, and many producers are now hanging out for the arrival of spring. Central and southern Queensland has a good moisture profile leading into spring, with the hopes of early rain in September and October. Northern and western Queensland is patchy, with the majority of areas being dry.Livestock prices have continued to increase over the past month off the back of tight supply, and many people in New South Wales are looking to stock up before spring hits. The majority of the weaner sales have now finished, and we’re seeing the tail end of this year’s weaner drop hit the market. These weaners, however, are still achieving great prices.

 

NSW – Toby Hammond
Most parts of New South Wales have experienced a number of cold fronts, which have brought large amounts of rain. Reports have shown that a lot of central and southern New South Wales has experienced above-average rainfall for July, and forecasts are predicting a similar trend will continue into August and start of Spring.These conditions have delayed livestock’s weight-gain performance, due to the stock focusing energy on keeping warm rather than grazing crop or pasture and putting on weight. There are lots of reports of foot sores in sheep, which is quite normal for this time of year, however it’s been further exacerbated due to the increase in the wet ground. Whilst being a challenging period for management practices, there’s a lot of optimism that – once sunny weather is upon us – both livestock and feed will bounce well away.I mentioned in last month’s regional round-up just how mild winter was, and the performance in both grass growth and livestock performance has remained fairly consistent. However, similar to last year, a vast region of the state is in a great position heading into spring, which will mean a surplus of feed and high demand to put mouths on it.Currently the prices for lamb and mutton are very strong. Some saleyard buyers have been reporting that trade lambs are fetching as much as $10.00/kg (cwt) and over-the-hook prices for mutton are creeping above the $7.00/kg (cwt) territory. With the skin prices bouncing back, there are some very positive results being reported when viewed as a $$/hd price.Cattle still remain strong across the board. Processors have been reporting well into the $8.00/kg (cwt) for killable steers and heifers and feeder prices have shot up into the mid $5/kg (lwt). Again looking at it as a $$/hd value, there are some astonishing figures being reported. This is a completely different scenario compared to this time last year, when COVID-19 cases started occurring in abattoirs throughout Victoria, and the lamb and mutton market took a dive to $6.00/kg (cwt) for lamb. Back then, you were lucky to find $5.00/kg (cwt) for mutton, not to mention the supply build-up it caused. With it being so wet and hard to find well-finished stock, the shortage has occurred and we’ve seen the market bounce up again.Overall this month, I’ve definitely noticed a shift in producers looking for PTIC cows or heifers, or something that already has a calf at foot. I think people are trending this way as a means of managing risk and creating options if we do see the market soften.

 

Victoria – Michael Phelan
More rain throughout much of Victoria over the last month has seen some areas become quite wet, especially those that received good early rains throughout March and April.  In the west, after a very slow start, significant falls have helped the season catch up somewhat, and it’s amazing that – with a bit of help from fertiliser applications – many broadacre crops are now not so far behind what we’d see during an average season.  Pastures that haven’t had a chance to rest in the drier regions are still struggling a little however.  With the rain has come a fair dose of wind, but as the old saying goes, “Wind brings weather”.Those that have received early rain and were able to establish a feed wedge going into the winter months are in a great position – and the feed just keeps coming.  There have, however, been reports in the wetter regions of animal nutrition issues associated with these types of conditions.  For example, cases of listeria in sheep have been reported, which is caused by the feeding of mouldy hay or silage which has essentially started to rot.  Very wet conditions can cause issues with management as it can delay the mustering of stock if conditions aren’t suitable and there are no breaks in the weather, making it difficult to give animals the attention they need.  This is where growers who have bitten the bullet and invested in such things as undercover yards, laneways and pasture management can get ahead.In regions where it was a very dry start to the year, pastures are still struggling to get away, with stock quickly nipping off whatever is coming through – even if growers have the ability to graze on rotation.  This is causing ewes and young lambs to come back a bit in their condition – however, with the moisture profile filling up, a good spring flush should help stock catch up a little bit in these areas. It’s certainly not uncommon to have some horrible conditions in the middle of winter but it is a good reminder that things can get wet – and they can get whole lot wetter than what they are now in Victoria. A quiet period during the middle of winter has sheep prices remaining steady across the board, with cattle seemingly finding another gear of late – especially in female stock of PTIC heifers or cows with calves at foot. In general, everything remains very strong at present.  As new-season sucker lambs start making their way onto the market in the next 3-4 weeks, it’ll be interesting to see what level of pricing we can expect through this period, with re-stockers and feed lotters keen to know what they’ll need to pay to secure store lambs.Finally, we’re doing a lot of work to set people up with finance for the busy period in the spring months, so they’re organised and not caught on the hop when opportunities start presenting themselves in the coming months.

 

Regional Round-Up

Posted on by Caitlin Dearden
Welcome to the regional round-up – all the latest livestock news from the paddocks, direct from our managers across Australia…
National overview – Chris Howie
Now we’re past the EOFY, don’t underestimate the quick run of numbers that will appear in July, having been held back to mitigate taxation with the prices of the last 18 months. Wool, lamb, mutton, grain and cattle are often held until July to soften the tax bill and create a bubble of supply that can put a brief dip in the market. Although there won’t be much sleep lost at the current prices, it’s funny how much effort we put into minimising tax compared to improving our production and marketing outcomes.It’s also the time of year that the lamb jobs start to kick. Up until last week prices were holding and, on some grids, dropped back under $8.Forwards have appeared with $8.70 for XB lambs into August. Auction lamb sales are starting to see quality trade lambs moving past the $9 realm, and heavy export lambs are well into the $8s. However, any secondary drafts are not seeing this competition and remain in the high $7s.In terms of cattle, trade cattle shortage and demand for feeders is really driving the market. Sales are continuing to strengthen, with many feedlots now operating openly across mixed breeds whilst once black was the only colour. Continuity of supply for the feedlot operations has taken priority over cosmetics and price. Hide prices have lifted from a very dull period of pricing, and there are whispers that foetal blood pricing is starting to reappear from some processors, on hooks cows that may have had an opportunity to the bull. Overall, with the potential of a very good trading period appearing in the spring, getting your trading facility set up now is a great idea. It’s vital to not miss the opportunities to buy and use your crop or future hay stubbles because you don’t have the funding in place.

 

Queensland – Angus Creedon
The news from Queensland is that decent rainfall in June has resulted in some excellent winter crops such as oats and barley. In saying that, 65% of QLD is still drought-declared and the recent rain in areas will only provide some short-term relief. These conditions are, however, allowing producers to purchase cattle onto crop, and prevent a sell-down for those still in drought-declared areas of QLD. This isn’t a massive change from previous periods, though we’re expecting spring in northern NSW to be outstanding, given the moisture levels. Livestock prices in Queensland have continued to stay strong and in some cases have increased. We’ve seen plenty of weaners hitting the market, along with PTIC cows, and 100-day grain-fed prices have lifted 10-15c, which has resulted in a lift in the feeder steer market. We can attribute this lift to the recent rainfall and low supply – and with supply being short, the prices are not going anywhere!

 

NSW – Toby Hammond
Weather conditions for most parts of New South Wales have been wet and cold as we progress into the winter depths of July. A lot of areas in higher elevations have already experienced snow, which has come unusually early this year, and despite the last month being bitterly cold, the moisture that’s come with it has been welcomed. Having plenty of moisture around at this time of year is a fantastic indicator for a positive spring, though the cold temperatures present challenges for producers who need to protect their livestock from the harsh coldness. Many farmers across the state will be heading into lambing or calving if they haven’t already finished or are half way through – highlighting the importance of nutrition and making sure animals are in appropriate conditions and able to seek shelter during such events. Given the abundance of feed around the areas, having livestock in a forward condition has not been too difficult to achieve.It’s worth noting that grazing crops – which had a shaky start through late March and April – are now firing away where some farmers have just started to graze their crops, or may be completing their first graze. Having this high-quality feed in the bank creates a lot of opportunity for trading livestock, as weight gains are heightened due to nutritional value in the crop. Across all categories, cattle prices are still strengthening.There’s always a winter supply gap which forces pressure on the kill and feedlotter prices, as demand in this sector strengthens. Demand’s still strong in the re-stocker sector as well, and showing no signs of coming back. Steers, for example, are costing anywhere from $1600-$1900/hd depending on weight, breed and quality, and are worth in the mid-to-high $2000’s/hd at the other end –  something that’s been on the increase for the last 12 months. Lamb prices remain strong though have the potential to soften the closer we get to spring, as the supply of new season lambs hit the market. The drop in supply for this time of year is pretty usual, year-on-year, which forces prices up as demand increases.

This year and last have been further exacerbated by the lack of numbers across the national herd, and flock which will take some years to recover. As the appetite grows – particularly in the cattle market for producers to trade and pay exorbitant prices for store animals – there’ll always be an expectation on the processors and feedlots to offer strong and competitive pricing, in order to maintain their supply and encourage farmers to sell. Otherwise, in seasons like we’re experiencing, farmers will be happy to sit back and put more weight on their stock.

 

Victoria – Michael Phelan
All areas of Victoria have now received some good rains, although it’s been very late in the west and has been followed by some very cold conditions, causing growth of crops and pastures to be very slow. Rain-wise most areas are now set up for the winter,  with many in central and eastern Victoria having a lot of cleaning up to do in the next couple of months after receiving some wild weather.  In spring we’ll see if we get the all-important rains in September and October that really drive things in the back end of the year. We’re heading into a quieter time of year now, with lambing in full swing and most having some sort of feed on the ground.This will be the case or a month or two, before fresh sucker lambs start coming onto the market and shearing season comes around again in August, September and October. Whilst worry is still there around stocking rates and slow growth in pastures, sucker lambs may come off their mothers a little earlier in order to keep breeding stock in better condition – however, generally things are manageable.Options are still there if some minor de-stocking needs to take place as lamb prices remain strong and the fat market is also good. Price-wise, things are pretty steady from week to week on the lamb side of things, with small fluctuations depending on the location of the market. The stratospheric prices of $9-$10 Kg/CWT have not really come to fruition like some expected, but pricing has been steady and at levels that producers should be able to make some good money at.

Cattle keep on keeping on and pricing just seems to keep trending upwards. If store buyers are game, they are definitely leaning towards female purchases, which at least give options down the track as opposed to simply trying to rely on making money from weight gain alone. With COVID lingering nationwide and livestock events approaching, we could be looking at another year without major events such as Sheepvention, which is already split into two events in order to cater to COVID – time will tell.

 

Red Meat and Wool Growth seminars

Posted on by Caitlin Dearden

This month, StockCo had a great opportunity to be involved in the agent-focused Red Meat and Wool Growth seminars that were run by the South Australia government with PIRSA and MLA.

Our National Business Development Manager, Chris Howie, attended the event – rubbing shoulders with agents and brokers from all over South Australia. Covering sheep and wool on day one and cattle on day two, the seminar saw a combined attendance of 64 (with some people attending both days), and eight agencies plus facilitators were all represented.

Michael Blake, Senior Advisor at PIRSA and Red Meat and Wool, focused on eTech opportunities in the livestock industry and coordinated both days. Jason Trompf combined humour with facts to speak to agents about helping producers read animal health signals in order to lift survival rates and productivity.

The opportunities for conversations between agents and wool brokers were very good, with a deep-dive into breeding traits that drive the overall performance of producer’s enterprises removing the traditional fixation on single-trait genetic selection. The fact that sheep in-particular are a multi-income system these days – and should be developed accordingly – was a strong theme.

One of the main take-home messages was that next-generation agents should create these discussions and the resultant value proposition. Both Jason and Michael helped the agency group understand how to create and capture meaningful data from individual enterprises, using ever-evolving agricultural eTech, including the utilisation of electronic eartags as management tools within farming enterprises across SA and the wider industry. The ability to capture this information allows significant and immediate opportunities to lift farm profitability, without an excessive cost for producers and agents alike.

The South Australia government, along with MLA, is the only state driving a forum targeted at agencies and, as Chris Howie said, “It’s a no-brainer that it should be adopted across the country. Too often when the various peak bodies meet, the agency community’s capacity to drive change is missed.”

The Leahcim/Panlatinga sheep stud and Days Whiteface Herefords were involved in the hands-on delivery across both days, with a focus on the holistic industry approach that’s required when looking to the future of the livestock and wool industry.

  • Upcoming livestock forums: 12th July, Naracoorte. 14th July, Jamestown. 15th July Kimba
  • Regional animal health workshops: 13th Sept, Jamestown. 14th Sept, Hawker. 17th Sept, Minlaton
  • Livestock tech expos: March 2022, South East and Lower North

Regional Round-Up

Posted on by Caitlin Dearden

Welcome to the third instalment of our monthly regional round-up – StockCo’s state-by-state overview of the latest happenings from the livestock industry across Australia.

National overview – Chris Howie
The impact of African swine fever is still very significant and the shortage is creating a product-hole that in turn creates demand. It’s important to remember that, in Australia, we cannot eat all we produce, so like New Zealand we’re at the mercy of the season and – whether we’re talking beef or lamb – world demand for red meat protein is continuing to grow. At present, New South Wales and Queensland have grass, and therefore supply is based on when an animal is ready, rather than a forced sale. However, the South Australia and Victorian season – other than the far south – is dry and powdery, meaning livestock is coming onto the market because of the season as well as the approaching tractor-driving season. This is the normal cycle most years, hence the prices don’t move a lot. 

Cattle are still holding their own and feeder demand is still very strong – especially for the performance end of the blacks and cattle under assurance programs. Grass contracts are also available till August and September at good rates. I’m a great believer in taking a piece of these grass contracts if you’re going to run cattle on good pasture or crop, with them ideally signed up by mid-to-late July. If you have cattle to sell, irrespective of breed, do your homework on what supply box they fit into and make those buyers aware of what you have. Mutton continues to trade strongly in all states, and the recent cyclone that went walkabout through the south of Western Australia caused considerable damage to farm infrastructure but did deliver much-needed rain that is well-aligned to the winter cropping program. In South Australia and Victoria above the Penola to Horsham line, the season is really starting to bite. Early summer rains destroyed the dry feed and now paddocks are bare and dusty. This in turn has seen a supply of lambs come on which have processor requirements covered into May.

Finally, Beef 21 is here and the excitement is palpable. I’ll be attending at the StockCo stand, and would love to have a chat if you find yourself in the vicinity.

 

Queensland – Angus Creedon
Here in Queensland, it’s starting to cool down and late autumn storms are helping with the winter crop establishment. Plenty of oats and grazing winter crops are being planted on great moisture profiles. Once most of the grass from summer has either frosted off or stopped growing, graziers with forage crops will purchase cattle and we’ll begin to see weaners hit the Queensland market over the next three months.In general, livestock prices have remained firm. Feeder prices haven’t changed for the past four weeks and processor prices have also stayed the same in a bid to level/lower the store price to be more economical.

Overall, things are looking great except that the first few frosts of the season will see a decline in protein and energy levels in the grass, meaning producers will need to decide if their current grass levels are enough to take them through to the end of the year.

 

NSW – Toby Hammond
Although NSW experienced substantial rainfall in early March, only the odd isolated shower has been reported since then. Most central and southern regions have by now experienced intermittent frosts, with residents in some places waking up to consecutive light frosts for an entire week or more. Daytime temperatures have also dropped back to tops of 22 degrees (textbook for autumn), which contributes to the general sense that we’re experiencing much more normal weather patterns than in previous years. Despite the lack of rain recently, farmers have reported that sub-soil moisture levels are still adequate and that the grass is benefiting. Many experts have declared that we’ve now reached the top of the market, which indicates that – without any rain on the horizon – the restocker market could soften.

Compared with this time last year, there’s still a distinct price difference across most categories of livestock where values are considered high. There was such strong confidence in the season during the same period in 2020 that the market was gaining momentum each week. At the moment, it’s a different scenario – prices remain strong but stagnant. Store lambs are still bringing $170/hd and well-bred young cattle under 300kg are still attracting prices upwards of $6/kg lwt. Some lamb processors have released forward prices in the early-to-mid $8 mark, and it will be interesting to see what sort of uptake they have on these contracts.

 

Victoria – Michael Phelan
The Victorian situation is very similar to this time last month. There was no significant rainfall in the western half of the state, and regions that did receive small amounts of rain over the past month (mostly central and eastern Victoria) are looking for follow-up rain to kick on a good early strike of pastures.For breeders in areas where there hasn’t been sufficient rainfall, lambs are hitting the ground onto less than ideal paddocks. Heavy supplementary feeding isn’t ideal because it draws less-attentive mothers away from their lamb to feed, and there’s no substitute for a green pick.

In previous seasons, many have pushed lambing into May or even June to ensure there’s green feed on the ground. This isn’t devoid of risks, as it can lead to lambing-down in cold, wet and windy conditions. Autumn breaks on average come two weeks either side of Anzac day, so there is still time but earlier breaks can save graziers a lot of money at this time of year.A flurry of feedlot lambs have entered the livestock market just as many mixed farmers turn their attention to getting their crops in the ground, causing prices to ease. Forward contracts for processors are now out for May and June and show a slight uptick, and the commitment processors get at their contract offerings will impact where spot market prices go between now and the end of June. Cattle prices remain strong, although there are signs things are hitting the rev limiter. Many are choosing to sit out of the market for the moment – particularly when buying weaner cattle – but persistent rain in NSW and Queensland will help keep the Australian fundamentals strong for a while yet and opportunities are still there for buyers.

Finally, I attended the “Beef It Up” expo at Corryong last week, where independent livestock analyst Simon Quilty spoke about world fundamentals for beef and lamb. Signs are looking good in terms of demand for both products. This is largely due to the fact that the US in particular is vaccinating its population at break-neck speed, which is restoring confidence in food outlets. It even looks as though the cruise ship sector may bounce back in time.

 

Regional Round-Up

Posted on by Caitlin Dearden

Welcome to the second instalment of our regional round-up – StockCo’s monthly chance for you to find out exactly what’s going on in the livestock industry across Australia.

National overview – Chris Howie
South and Western Australia have remained relatively dry through the agricultural areas and are awaiting the preferred April break to start sowing. Many who had expected a wet summer had sown dry grazing crops in the hope of lambing or calving onto green feed in those states. Supplementary feeding is well underway for both lambing and calving. Livestock targeted at winter sale periods are doing well on pasture that’s benefited by recent rains or supplementary feed programs, with anticipation of price-for-weight reward. At present, both SA and WA are in normal seasonal patterns, and have not received the rainfall of the centre and east coast. Cattle prices remain at record levels, with joined females still providing the best opportunities considering recent rains. Sheep and lambs are entering a seasonal period of price volatility, with many waiting to see what the supply position will be over the next four months before committing. Normally this period will see mutton and lamb prices gradually strengthen, until the new season supply appears. The Queensland and NSW rains have filled in many dry areas and had an immediate impact on the supply of store and prime cattle. This, in turn, will see a continuation of the strong cattle prices through the winter.COVID is still an inhibiting factor on the industry calendar, but many events have resumed, with the recent NTCA event in the NT, the upcoming Royal Show series and Beef 21 in Rockhampton. Many state-based industry days and events are planned, and it’s well worth searching those event calendars so you don’t miss out.

 

Queensland – Angus Creedon
Queensland in general has received great rain in March, so the cattle market’s still very strong and will continue to increase over the next month or so. In the next six weeks there’ll be a lot of oat crops ready to be grazed in southern Queensland and northern New South Wales, so that will encourage the price of cattle to stay where it is, if not improve. With large areas of Queensland having had such good rain, they’ll be able to hold on to the cattle they’ve got and the processor supply will be very tight – they’ll be relying on the feedlot market for a constant supply of cattle. Some of the biggest processors, including JBS, are shutting down for a couple of weeks and directing cattle to their other plants.In general, everything’s looking very good going into winter – there are still some dry areas in north west Queensland, but overall it’s not too bad and, despite not seeing much of an increase in numbers of animals, the prices have gone up.

 

NSW – Toby Hammond
Most parts of eastern New South Wales have received substantial rainfall, which has set virtually everyone up for a pretty reliable autumn. This, in turn, has sparked a lot of buying activity and created huge potential for female trades. Grazing crops are looking very good and the outlook is positive for future feeds. Prices of live weaner cattle – 200-300kg heifers – are very strong, though there’s not a lot of forward pricing from feedlots or processors. When it comes to the lamb market, that’s now softened a little – however, there are forward prices out there and that’s made store lamb prices stronger. Finally, western New South Wales has missed out on rain and it’s starting to cool off, so further down the track there could be opportunities for purchases out of these areas.

 

Victoria – Michael Phelan
In western Victoria in March and April the supplementary feeding ramps up, and right now it’s at its peak whilst we wait for the break in seasons. Having not had any rain come down from New South Wales it’s quite dry over this side of the state, but on the eastern side patchy showers that have led to enough rain to get a germination – It’s an anxious wait to see if it’s a true break in the dry.Where graziers have got rain, or there’s confidence they’ll get it, there’s been interest in ewes. A lot of farmers over here are broadacre croppers, and they’re currently preparing their paddocks and burning stubble. A lot of croppers with lambs in containment are now looking to offload them, so there’ll be an influx of lambs available over April and May. Graziers who aren’t on a pipeline of water get a bit anxious at this time as it’s not much fun having ewes lambing into dusty paddocks, so after three weeks or so the west will really be looking to see if those rains come.